I reviewed the fourth edition of this book some time ago -- 37 Tax Executive 107-08 (October 1984) -- and did not recommend it. It is gratifying to see Mr. Grundy has entirely rewritten the text; it is now a far better and more useful book.

The fifth edition covers 24 tax havens, including most of those which one might expect to find. Mr. Grundy points out 13 jurisdictions which he has had to leave out: of these, I only regret the omission of Singapore. Among those not mentioned in his list, I would like to have seen some reference to Uruguay (a reborn tax haven) and perhaps even St. Vincent.

In his introduction, Mr. Grundy explains the object of this new edition. He is trying to identify a jurisdiction which will provide a likely answer to the readers problem. By and large, he has succeeded as well as can be expected in a book of 100 pages.

The reference maps will help the novice; the reference table, comparing the jurisdictions covered, is a useful quick reference source. I wish the table had included a comparison of redomiciliation provisions (in and out)--often a key question when searching for a suitable tax haven as well as some indication of whether an audit is required under local law.

Perhaps Mr. Grundy is a little over-enthusiastic in his recommendation of the Bahamas as "the true universal tax haven," and in his statement that "the advisor who is new to the world of tax havens would do well to concentrate his energies on acquiring a detailed knowledge of the facilities offered by the Bahamas." He mentions the "discernible degree of social stress" which, at least in my opinion, is one of the significant negative factors affecting this jurisdiction. Although the choice of a particular tax haven is frequently a matter of opinion, I am not enamored of the high costs associated with a Bahamian incorporation, or with their out-of-date company trust laws. For that reason, the Bahamas is very low on my list of jurisdictions in which to incorporate a tax haven company. Mr. Grundy, however, has been around the international tax world longer than I have, so his opinion must be respected.

In the chapter on Barbados, specific mention of those International Business Companies that are resident in Barbados but incorporated elsewhere might have alerted the reader to a useful alternative. Concerning the same chapter, I cannot think why Mr. Grundy says that ". . . there can be circumstances where it is desirable to pay tax, albeit at a low rate (involving e.g. Canada . . .)." In other jurisdictions perhaps, but not in Canada.

In the Bermuda chapter, Mr. Grundy has overlooked (or perhaps omitted because of space considerations) a negative factor--the payroll tax. Professional firms that pay this tax shift the burden to their clients rather than bear it themselves, so it effectively adds to the already high costs of operating in Bermuda.

I was interested to read (page 29) that shares of a Jersey company may be issued in any currency other than the Swiss franc. One wonders about the reason for this odd restriction, which I was unable to confirm from other sources in my library.

In the chapter on Cyprus, Mr. Grundy has missed a very important point: offshore companies cannot generally take advantage of the Cyprus network of tax treaties. Nearly every treaty contains significant restrictions on the extent to which a Cyprus offshore company can benefit from its provisions. For example, the Canada/Cyprus treaty, Article 29,just says "This Convention shall not apply to . . .". The U.S./Cyprus tax treaty (Articles 4(6) and 26, when taken together) substantially limits the treaty benefits available to a Cyprus offshore company. Most other treaties have similar restrictions.

In the Isle of Man chapter, Mr. Grundy says that the one-percent capital duty is levied "In conformity with EEC practice,". He has overlooked the 1985 change in the EEC directive (85/303/EEC), permitting the capital duty to be reduced or abolished. The 1988 U.K. Budget eliminated the one-percent capital duty, and no doubt the Manx Government will consider a similar step, if it has not already done so by the time this review is published. Mr. Grundy fails to mention that international banking facilities available in the Isle of Man are limited, compared to those in many other tax havens such as the Channel Islands, the Cayman Islands, and the Bahamas.

An oddity in the Luxembourg chapter is the combining of "Vancouver, New York or London" as examples of major "market places." Western Canadians would wish it were so!

The chapter on Switzerland explains the situations of a Swiss "client" so well that I reproduce here:

"Being a client in Switzerland is rather like being a paying guest in a castle: so long as you obey the rules and pay the bill, your presence wil be amicably tolerated, but you are not to bring the establishment into disrepute, and you are not to forget that an unbridgeable guld separates you from the proprietor."

Mr. Grundy at his witty best!

The United Kingdom chapter, relating to U.K. non-resident company, has regrettably been overtaken by events since the book was published.

Care has been taken with the production of this little book. On page 49, there is a small slip--the fact that a Hong Kong company must have a resident secretary is stated twice. On page 83 there is an odd, unfinished sentence: ". . ., and if at the same time."

All in all, this fifth edition is a usefule little book for the novice international tax planner, to whom it can be recommended.

COPYRIGHT 1988 Tax Executives Institute, Inc.
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